Cutting property taxes critical to Queensland’s economic recovery

07 Apr 2011

Queensland Executive Director of the Property Council of Australia Kathy Mac Dermott is calling on the Treasurer to abolish the “temporary” 0.5% land tax surcharge he introduced in 2008-09 and abolish stamp duty for off the plan sales for three years in this year’s State Budget.

A new report released by the Property Council of Australia confirms that the property industry is the most important sector to the Queensland economy but the sector is breaking under the strain of excessive state and local government taxes, fees and charges.

The Property Council of Australia commissioned AECgroup - one of Australia’s leading economic consultancy firms - to quantify the value of the property sector to the Queensland economy and to measure the downturn being experienced in the sector.

“The AECgroup report confirms the property industry is Queensland’s engine room, but that the engine is stalling.

“It is clear that to rebuild Queensland, we must restore Queensland’s property sector.

“The only way this can be achieved is to cut taxes, fees and charges levied on Queensland’s property sector to make the State an attractive investment destination.

“AECgroup’s research shows Queensland’s property industry is the biggest contributor to Gross State Product (GSP), employment and state and local government tax revenue.

“The property industry generates $30.9 billion of Queensland’s GSP. That equates to 12.6 percent of Queensland’s GSP – one and a half times higher than mining (8.4 percent),” Ms Mac Dermott said.

“The research also highlights that around 280,000 Queenslander’s are directly employed by the property industry, making this sector Queensland’s largest direct employer. By comparison mining directly employs less than 50,000 people.

“If you add the indirect jobs generated by the property sector, the figure grows to a staggering 584,000, or 30.1 percent of total employment in Queensland.

“However the AECgroup research confirms that we are at serious risk of killing the goose that has, year after year, laid the golden egg.

“Quite simply, Queensland’s property industry is over taxed, over regulated and under immense strain.

“On the taxation front, the industry pays $0.12 of tax per $1 GSP it generates. That is more than twice the statewide average of $0.05 for all industries combined.

“The property industry is the single largest contributor to State taxes – providing $3.8 billion, or one third of the State’s total tax revenue. Mining contributes around $2.2 billion.

“In addition to this, local governments across the State collect over $4 billion in rates and charges.

“In recent years the level of taxation paid by the property industry in Queensland has escalated dramatically, this is despite the negative impact of the GFC on property values. In land tax alone, revenue to the State has more than doubled since 2006-07.

“This extreme level of taxation is having a real impact on investment and employment in Queensland.

“The AECgroup research shows that between 2006-07 and 2009-10 the value of residential and non-residential building activity in Queensland declined by 2.6 percent. Over this same period NSW and Victoria recorded 21.4 and 26.7 percent increases respectively.

“Queensland is falling well behind other states and the net result is less investment, fewer jobs and a worsening of our housing affordability crisis.

“Over the last three years we have had an annual construction shortfall of 10,000 homes - a direct contributor to our housing affordability crisis.

“On the employment front, the State Government’s own figures show that over 11,000 construction jobs were lost in 2010 alone.

“Investment and jobs are migrating south at an alarming rate and we must take action now to reverse this trend.

“This is why we are calling on the Queensland Treasurer to abolish the “temporary” 0.5% land tax surcharge he introduced in 2008-09 in this year’s State Budget.

“We are also calling on the Government to abolish stamp duty for off the plan sales for a period of at least 3 years.

“The Government must also commit to reforming local government minimum and differential rating which has resulted in unfair targeting of particular property owners in recent years.

“The property industry can simply no longer be the cash cow for State and Local Governments.

“We need immediate reform and relief in taxes, fees and charges to restore the State’s competitiveness and rebuild investor confidence in Queensland.”